Thursday May 15, 09:00 AM
Invensys FY opg profit up 19 pct, to make further progress in new year UPDATE
(Adds comments from the CEO, analyst, share price)
LONDON (Thomson Financial) - UK engineering group Invensys Plc. posted a 19 percent increase in full-year operating profit and said it is confident of making further progress in the new financial year.
The company's earnings were boosted by a 95 million pound compensation for lost work on London's underground network as well as lower finance costs, after a restructuring of the group, which left it 'effectively debt free' with 200 million pounds of cash.
Chief executive Ulf Henriksson told reporters on a conference call that the company will partially use the cash to grow the company through acquisitions and will also resume paying a dividend, which is expected to start in 2009.
'We have a pipeline and are pursuing conversations,' Henriksson said regarding acquisitions and added 'we expect things to happen in the next twelve months.'
The CEO said he could not comment on the amount of the potential dividend but analysts have been expecting the dividend to come in the range of 5 to 6 pence per share.
Invensys (LSE: ISYS.L - news) also announced that Martin Jay is intending to retire as chairman and director of the group at the 2009 Annual General Meeting.
At 08.35 Invensys shares were up 4.5 pence or 1.5 percent to 309 pence. Landsbanki analyst Andrew Carter said that while Invensys is 'not quite a normal company' as it does not yet pay dividends, pays material finance charges despite a net cash balance and has an 'unusually' low tax rate of 15 percent, he sees considerable value at the current share price of 305 pence.
Carter retained his 'buy' recommendation on the stock.
The company today posted full-year results to March 31, in which it said that orders were down 2 percent, at constant exchange rates, to 2.03 billion pounds from 2.1 billion pounds.
The company explained that an improvement at its Process Systems division was offset by a decline at its Rail Group division, reflecting its uneven order intake.
Revenue for the year was up 6 percent at constant exchange rates to 2.11 billion pounds with good performances at Process Systems, up 9 percent, and Rail Group, up 20 percent, partly offset by the anticipated reduction at Controls, which recorded a 5 percent lower revenue for the year.
Henriksson said the global energy and infrastructure markets for Process Systems and Rail Group remain strong and are expected to continue to grow.
At Controls, the CEO expects at least to maintain its operating profit and cash flow performance despite continued softness in some of its markets.
Invensys said it has seen softer market conditions in some of the markets within Controls, and particularly in North America. The group said however, that it will continue to invest in capital expenditure and restructuring to at least maintain its profitability and cash performance of the division.
The company also said it has reshaped its portfolio, which together with a strong operating performance led to an operating margin of 12 percent and underlying earnings per share growth of 35 percent to 17 pence.
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
